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Hello
There is past exam questions on limitations of external audit for 3 marks. Will these 3 points be correct for it?
1)Not all items in financial statements are tested i.e auditing is done on sample basis rather than population basis
2)Financial statements are based on estimates and estimates can never be accurate
3)Events after balance sheet date i.e subsequent events also distort figures1 Correct
2 Some figures are based on estimates and this will limit the audit[These two points were stated in the model answer, so why are you asking me about them?]
3 Not really. Adjustments can be made where appropriate for post balance sheet events. Of course, not relevant events might be identified by management or the auditor.
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